What is CDP Disclosure?

What is CDP Disclosure?

CDP (formerly the Carbon Disclosure Project) operates the world's largest environmental disclosure platform, collecting climate change, water security, and deforestation data from companies, cities, states, and regions on behalf of investors and purchasing organizations. Founded in 2000, CDP sends annual questionnaires to thousands of companies requesting detailed environmental data, scores responses from A (leadership) to D− (disclosure), and makes the data available to its signatory investors and supply chain members. Over 23,000 companies disclosed through CDP in 2023, representing more than two-thirds of global market capitalization.

Why It Matters

CDP holds a unique position in the ESG ecosystem as both a data collection platform and a scoring system with real market consequences. Its signatory investor base—over 740 financial institutions representing $136 trillion in assets—uses CDP data for investment analysis, engagement, and stewardship. A company's CDP score directly affects ESG ratings from MSCI, Sustainalytics, and S&P Global, which incorporate CDP data as a primary input. Failing to respond to CDP—or scoring poorly—creates cascading effects across the entire ESG evaluation chain.

The supply chain program amplifies CDP's reach. Over 330 major purchasing organizations—including Walmart, Apple, Microsoft, and Unilever—use CDP Supply Chain to request environmental data from their suppliers. Companies that ignore CDP investor requests might calculate that the reputational impact is manageable, but ignoring a request from a customer that represents 15% of revenue is a different calculation entirely. The supply chain program has been particularly effective at extending disclosure into mid-market and privately held companies that don't face direct investor pressure.

CDP's alignment with regulatory frameworks makes it increasingly indispensable. CDP restructured its 2024 climate questionnaire to incorporate ISSB (IFRS S2) requirements, enabling companies to meet both CDP and ISSB disclosure obligations through a single reporting process. CDP also maps to TCFD, GRI, and ESRS, positioning itself as a practical reporting channel that feeds multiple frameworks. For companies facing the challenge of multi-framework reporting, CDP serves as an efficient single-entry point for environmental data.

The scoring methodology creates competitive dynamics. CDP publishes an annual "A List" of companies achieving the highest scores, generating significant media coverage and peer pressure. Companies on the A List receive recognition from investors and customers; companies scoring poorly face engagement from CDP signatory investors pushing for improvement. This naming-and-shaming dynamic—unusual for a voluntary disclosure system—has been remarkably effective at driving year-over-year improvements in corporate environmental reporting quality.

How It Works / Key Components

CDP operates three main questionnaires: Climate Change, Water Security, and Forests. The Climate Change questionnaire is the most widely used, covering governance, risk management, strategy, GHG emissions (Scope 1, 2, and 3), energy, targets, carbon pricing, and value chain engagement. Water Security covers water risk assessment, water accounting, governance, and strategy. Forests covers commodity-specific deforestation risk for timber, palm oil, soy, cattle, rubber, cocoa, and coffee.

The scoring methodology evaluates four levels: disclosure (is the company reporting?), awareness (does it understand its environmental position?), management (is it taking action?), and leadership (is it demonstrating best practice?). Companies progress from D/D− (disclosure level) through C/C− (awareness), B/B− (management), to A/A− (leadership). The scoring is sector-adjusted, meaning companies are benchmarked against industry peers. Approximately 2% of responding companies achieve an A score in any given year.

The questionnaire structure is extensive. The 2024 climate questionnaire contains roughly 130 questions organized into 12 modules. Key modules include: governance (board oversight, management accountability), risks and opportunities (climate risk assessment process, identified risks with financial quantification), emissions (Scope 1, 2, 3 with methodology disclosure), targets (absolute and intensity targets, science-based target status), and strategy (transition plans, scenario analysis, carbon pricing assumptions). Companies typically invest 200–500 person-hours in preparing a comprehensive CDP response.

CDP's data powers the broader ecosystem. ESG rating agencies pull CDP data directly into their models. Academic researchers use CDP's dataset—one of the largest longitudinal corporate environmental databases—for climate finance and corporate behavior studies. Policymakers reference CDP data for regulatory development. The Science Based Targets initiative uses CDP as its primary disclosure channel for validated targets. This network effect means CDP data flows into virtually every ESG evaluation and investment decision globally.

Council Fire's Approach

Council Fire helps clients optimize their CDP disclosure strategy and scoring through questionnaire preparation, data quality improvement, and response optimization. We identify the specific disclosure gaps and management actions driving score limitations, develop multi-year improvement roadmaps targeting A-list performance, and ensure CDP responses align with and feed into ISSB, ESRS, and other regulatory reporting obligations.

Frequently Asked Questions

How much does CDP scoring affect my company's ESG ratings?

Significantly. MSCI, Sustainalytics, and S&P Global all use CDP data as a primary input for environmental scoring. A company that doesn't respond to CDP typically receives the lowest possible environmental scores from rating agencies, as the default assumption is non-disclosure equals poor performance. Improving from a C to a B on CDP climate can lift ESG ratings across multiple agencies, with downstream effects on index inclusion, investor screening, and sustainability-linked financing terms. The leverage effect of CDP data into multiple ratings makes it one of the highest-ROI disclosure investments a company can make.

Is CDP disclosure mandatory?

CDP disclosure itself is voluntary—no law requires companies to respond. However, several dynamics make it functionally mandatory for large companies: investor expectations (740+ signatories representing $136 trillion), customer requirements (330+ supply chain members), ESG rating implications, and increasing regulatory alignment. The EU's CSRD doesn't mandate CDP specifically, but CDP's 2024 questionnaire alignment with ISSB and ESRS means companies can use CDP as a reporting channel for mandatory obligations. For practical purposes, any company in the S&P 500, FTSE 350, or ASX 200 faces such strong market pressure to disclose that non-response carries significant reputational and financial consequences.

What's the most effective way to improve my CDP score?

Focus on the management and leadership scoring tiers, which carry the most weight. Common score-limiting factors include: missing Scope 3 emissions (calculate and report even with estimates), absence of validated science-based targets (commit to SBTi), incomplete climate risk assessment with financial quantification, lack of board-level climate competence disclosure, and insufficient value chain engagement. Companies typically improve by one letter grade per year with focused effort. The single highest-impact action for most companies is committing to and validating a science-based target, which unlocks points across multiple scoring modules simultaneously.